January 1995
Charles E. Hurwitz
5847 San Felipe, Suite 2600
Houston, TX 77057
Dear Mr. Hurwitz:
As a valued member of the Kaiser management team, you have been
selected for a grant of stock options under the Kaiser 1993
Omnibus Stock Incentive Plan (the "Plan"). The Plan is designed
to align key employees' and shareholders' objective, retain key
employees, and offer competitive long-term compensation
opportunities.
This letter contains a brief summary description to help you
better understand the details of the Plan. The summary
description sets forth only the highlights, and is qualified in
its entirety by the complete copy of the controlling Plan, a copy
of which you may obtain upon request from the Corporate
Secretary, at the address set forth below or by calling (713)
267-3670.
On December 21, 1994, the Company's Compensation Committee
granted to you, the right and option (not qualified as an
Incentive Stock Option under the Internal Revenue Code) to
purchase, on the terms and conditions set forth in the Plan
250,000 shares of KAC common stock, $.01 par value, at the
exercise price of $12.75 per share, (20% above the closing price
on the New York Stock Exchange on the date of the grant)
exercisable from time to time in accordance with the provisions
of the Plan. The above option will vest at the rate of 25% per
year over the next 4 years, with the first 25% vesting on
December 21, 1995. The grant shall expire and cease to be
exercisable ten years from the date of grant, or on such earlier
date as may be provided for by the terms of the Plan. This grant
is subject to the Company's right to repurchase the option, in
whole or in part, within ten days of your exercise of such option
at a price equal to the difference between the exercise price and
the closing price on the date of your exercise as reported by the
New York Stock Exchange (or such other national exchange on which
the KAC common stock may be listed).
Each exercise of this option shall be by means of a written
notice of the exercise (using the enclosed form) delivered to the
Corporate Secretary, in Houston, at the address specified on the
form. If the notice of exercise is received after 5:00 p.m.
Houston time, the exercise will be deemed to have occurred on the
next business day. The notice of exercise must specify the
number of shares to be purchased and be accompanied by full
payment in cash, or by certified or cashier's check, payable to
the Company for the full exercise price of the shares to be
purchased. Upon payment of the full purchase price, the Company
will make a withholding for federal, state and local taxes. The
withheld amount may not be sufficient for payment of taxes owed
by you. Ordinary income is recognized by an optionee upon
exercise of a non-qualified stock option (a right granted by
employer to purchase stock at stipulated price over a specific
period of time) in an amount equal to the difference between the
market value of the shares of common stock acquired and the
exercise price paid for them.
All options terminate immediately upon termination of employment
for cause. If employment terminates on account of death or
disability, any of the options hereby granted which are
exercisable at termination may be exercised until the earlier of
the first anniversary of such termination date or its scheduled
expiration date. Any option exercisable upon the holder's
retirement may be exercised until the third anniversary of
employment termination or its scheduled expiration date. On
termination of employment in any circumstances not mentioned
above, an option exercisable at termination may be exercised for
three months thereafter, but not after its scheduled expiration
date.
The option shall become immediately exercisable on a change of
control. A change of control shall be deemed to have occurred if
at any time MAXXAM Inc. beneficially owns less than 50% (on a
fully diluted basis) of the outstanding Common Stock of KAC.
If the outstanding shares of the common stock of KAC are
increased, decreased, changed into, or exchanged for a different
number of kind of shares or securities of KAC as a result of a
reorganization, recapitalization, reclassification, stock
dividend, stock split or reverse stock split, an appropriate and
proportionate adjustment (to be conclusively determined by the
"Compensation Committee" of the "Boards" of Directors of KAC and
KACC) shall be made in the number and kind of securities
allocated to this option without change in the total price
applicable to the unexercised portion of this option, but with a
corresponding adjustment in the price of each share or other unit
of any security covered by this option.
The Compensation Committee has sole discretion to determine which
employees receive awards under the Plan and to establish the
terms of each award (subject to the provisions of the Plan). The
award or the option should be considered as an independent action
and is not to be construed as repeatable or ongoing. The
Compensation Committee also has authority to construe, interpret
and implement the Plan, to make rules and otherwise administer
the Plan, and its determination on any matter relating to the
Plan is conclusive. The Boards may terminate, suspend or revise
the Plan at any time, subject to stockholder approval for certain
types of amendments. However, no amendment or other action by
the Boards, including termination of the Plan, may adversely
affect any outstanding award without consent of the recipient
(or, if applicable, the recipient's heirs or estate).
Also enclosed is a form of Beneficiary Designation to designate a
beneficiary to receive shares of common stock of KAC, as well as
any benefits under the Plan that may become payable on account of
your death. If you wish to make or change a designation of your
beneficiary under the Plan you should complete this form promptly
and return it to Jim McKnight, Director Corporate Personnel, 6177
Sunol Boulevard, Pleasanton, CA 94566. In the absence of any
such beneficiary designation by you, all death benefits under the
Plan would be payable to your estate.
We congratulate you on your selection to participate in this
Plan. It indicates your importance to the performance of the
Company. We would also like to thank you for your dedicated
service and contribution to the past success of Kaiser, and we
look forward to your continued contribution. If you have any
questions regarding the Plan, please feel free to discuss them
with Byron Wade in Houston or with Jim McKnight in Pleasanton.
Please indicate your acceptance of this agreement by signing
below and returning such signed copy to Byron Wade, 5847 San
Felipe, Suite 2600, P.O. Box 572887, Houston, Texas 77257-2887.
Sincerely,
George T. Haymaker, Jr.
Chairman of the Board and
Chief Executive Officer
I acknowledge and accept this award under the terms specified in
this letter and the Plan.
_______________________________
Employee's Signature
_______________________________
Date